Disruptive technologies and the aspect of change management

Kotter’s ‘eight’ on change management should seem fairly recognisable to most managers. Some even claim them indispensable in tackling the constant pressures emerging from internal and—particularly— external environments of the organisation.

Briefly re-capping on Kotter’s ‘eight’, you’d probably already know as a manager at any organisational level that they are about urgency, shape coalitions. Also, they are about defining and communicating a vision for the change initiative as well as quick wins, building on change and anchoring in the culture. All of which must be considered by top management.

While definitely not an overnight process, each step represents carefully thought out activities, typically involving employees, managers, change agents, etc. The culture must be positioned to absorb the consequences of change, including all the whats, the whys, the hows, the whens.

Yet, while rapid changes in the external environment of the organisation appear to be faster influencing performance and its prerequisites, change management as a discipline itself is up for a pivotal test, particularly in the face of competing through means of a digital strategy and against disruptive technologies.

Listening to Kotter in an interview on the how to visualise the organisation of the 21st century, the management guru shares some good news and some bad news. Swallowing the latter, 0.01 per cent of organisations succeeded in adapting to becoming ‘…fast, agile, reliable and efficient…’. Where does that leave your organisation?

Still, Kotter brings along some good news, too. You can do it. You just mobilise the entire, collective memory of management, the owner (if that person is still around), trusted key employees, historic data and wind back history of organisational development and experience a re-discovery of the roots.

Way back when it all started, ideas were crazy, maybe there was a vision, absolutely no mission, everything appeared much less formal, particularly the organisation. Re-create this retro environment and connect it where appropriate to the existing efficient, hierarchical structure.

While this is what should do in visualising future organisational design as top management, i.e. creating a parallel organisational entity to the already efficient one, that disorganised entity should be one that you use for the adoption process, and where you form, establish, tune and execute in becoming fast, agile, reliable and efficient.

So, if you think you heard this one before, you may be so right. While being much in line with Kotter, I seem to recall the organisational design depicted. Kotter suitably provides a direction for organisation to aim its change initiatives, and while intentions somehow seem to make great sense, they also in concert heavily resemble endeavours engaged with by large organisations, attempting to promote a stronger innovative culture. Ever heard of organisational ambidexterity?

In their landmark contribution to management literature, ‘Organizational Ambidexterity in Action: How Managers Explore and Exploit’ Michael Tushman and Charles O’Reilly (2011) discuss conditions for long-term survival of the organisation.

A key message or question raised in their article (amongst several) is by recalling James March’s equally ground-breaking perspectives published in 1991, thus asking how organisations are still seen running aground, despite being resourceful and successful. What keeps them from long-term survival?

More interestingly, March is referred to from the perspective of introducing ‘evolutionary engineering’. Essentially, this is about maintaining the capability of replicating earlier successes by taking advantage of the company’s focus on strengthening “exploitation and exploration processes and adapt to changed environmental conditions” through its “organizational experience and memory” (Tushman and O’Reilly, 2011). In other words, reconfiguring its dynamic capabilities, distinctively differentiating the organisation from its competitors in a ‘slow moving world’ (Kotter International, 2015).

Much in line with Tushman and O'Reilly, McKinsey emphasised in an article way back in June 2015 (What it takes to build your Digital Quotient) that the path to succeed in becoming a fast and agile organisation requires top management to assume focus and firm leadership.

Whilst simultaneously facing challenges from organisational and technological perspectives, McKinsey most prominently highlights a frontrunner company one that meets changes by operating with a bold culture that works very effectively together, even when the organisation is split up in separate entities. Also, that company is extremely customer oriented, and running with a top management that is not afraid of taking risks and absorbing failures.

From that perspective, the organisation analyses which business areas it makes initially most sense to ‘upgrade’ in creating most value from going digital, while at the same time selecting a number of critical processes constitute the first ‘proof-of-concept’.

Headed by the Chief Digital Officer, who assumes primary executive responsibility of the overall transformation process, the ‘experimenting’ part of the organisation tests, refines and gradually implements new platforms upon which to generate revenue streams from the digital realm. In concert, such initiatives are supposed to transform employee and customer engagement.

In parallel, existing skills, processes, learning patterns, legacy-systems, etc. of the incumbent organisation are correspondingly reviewed to prepare for infusion of digital competencies, platforms and governance.

While most major change initiatives are seen typically to fail—either for reasons of bad planning or resistance in the organisation—no one claims that neither Kotter nor McKinsey are depicting an easy path to both adopting and executing on a digital strategy. Worse still, change also must happen fast.

In any event, both McKinsey and Kotter explicitly concur with Tushman and O’Reilly in strictly emphasising that top management—and seniors, too—share full responsibility in being able to distinguish management from leadership during the process of transformation into executing on a digital strategy.

Inasmuch management essentially frames the very decision to go digital and hire the CDO to do the job, the organisation expects the rest of the journey to succeed as well. This is where top management is tested on ability to execute true leadership.

The very second top management messes with the DNA of the organisation’s strategic ability to compete and perform by blueprinting a reconfiguration of dynamic capabilities, such initiatives must be expected to challenge professionalism, envisioning and comfort zones of executives.